Advance Pricing Arrangements
Today’s transfer pricing decisions are subject to more scrutiny than ever before by revenue authorities worldwide. The complexity of these dealings and the uncertainty associated with their tax treatment often make the option of an advance pricing arrangement (APA) very attractive. Deloitte’s global transfer pricing team has a proven record of success in achieving certainty with APAs.
Successful negotiation of an APA can achieve:
- Certainty of tax treatment
- Avoidance of double taxation
- Freedom from penalty exposure
- A non-adversarial negotiation environment
- Time and cost savings.
Our team of leading transfer pricing specialists includes senior ex-ATO officials David Grecian, Marc Simpson, and David Lewis. Their in-depth knowledge enables us to develop, support and successfully negotiate all forms of transfer pricing methodologies.
As part of any bilateral APA submission, we work closely with our transfer pricing specialists in all participating countries to bring bilateral resolution to the client’s APA request.
A new client which was a subsidiary of a US-based technology company had an existing APA and engaged our transfer pricing team to negotiate its renewal on the best possible terms. The terms of the existing APA were quite complex and our transfer pricing team reviewed its operation with a view to simplifying it for the future.
Result: Our transfer pricing team negotiated a simplified renewal for the APA on favourable terms for our client. Our review of the previous APA also uncovered an error made in a prior year that, after further negotiations with the ATO, resulted in the company receiving a refund of $1.5 million in overpaid tax.
The Australian subsidiary of a foreign multinational had been negotiating an APA with the ATO for several months. Unfortunately, the company had been unable to reach agreement with the ATO on a number of issues which meant its relationship with the ATO had become strained and negotiations had reached an impasse. The company engaged Deloitte to solve the stalemate and move the APA forward to completion.
Result: Our Transfer Pricing team reviewed the APA material and was able to use its experience with previous APAs to establish the likely reasons for the impasse and develop a strategy to resolve it. Our team was subsequently able to provide additional material and alternative analysis which broke the impasse and provided a basis for final agreement on the APA between our client and the ATO.